No Merger For Hexion, Huntsman
Thursday, June 19, 2008
Hexion Specialty Chemicals' planned purchase of a major competitor likely won't happen after all, the company said Wednesday.
The deal, first announced last summer pending regulatory approval, called for Hexion to buy Huntsman Corp. for $10.6 billion. The move would have nearly tripled the size of Hexion, an outgrowth of the former Borden Chemical.
But in a filing in the Delaware Court of Chancery, Hexion said it believes the merger with "Huntsman is no longer viable."
"While both Hexion and Huntsman can be successful as separate companies, they cannot now support the debt load that was agreed to at the time the transaction was put together," Craig O. Morrison, Hexion's chairman, president and CEO, said in a statement.
Morrison said that Hexion still believes that a merger of the two companies would offer "significant strategic benefits" and that Hexion would continue to work toward closing the deal.
"However, the financing for the acquisition is predicated on a certain level of financial performance and, given the increase in Huntsman's total debt and decrease in earnings, Hexion does not believe that the transaction can be completed," he said.
Given Huntsman's declining financial situation, Hexion believes that completing the merger would leave the combined company "insolvent," said Peter Loscocco, Hexion spokesman.
"We have tremendous respect for Huntsman (and) we still think the deal makes sense, but the financing for the deal is based on a certain level of financial performance," he said. "We'll still use reasonable efforts to close the deal, but we don't believe the banks will provide the debt financing for the mergers as outlined in the commitment letters."
Loscocco said Hexion remains "well positioned."
Huntsman is a chemical-maker based in Salt Lake City. Hexion, which employs about 200 people in central Ohio, makes resins, adhesives and coatings used to make exteriors of buildings weather resistant, to bond ceramic and marble tiles to floors and to make parts of planes more resistant to fire and noise.
Source: The Columbus Dispatch, Ohio
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